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Debenhams falls into administration with 50 stores to close after Mike Ashley’s rescue plan fails
DEBENHAMS is in administration after rejecting a £200million rescue plan from Sports Direct tycoon Mike Ashley.
The retailer, which employs around 25,000 staff, is now in the the hands of lenders as part of a pre-pack administration process.
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Mike Ashley branded the administration of Debenhams a "national scandal" this afternoon.
The deal doesn't mean that Debenhams will disappear from the high street but some stores will still close.
A "pre-pack administration" is an insolvency process for a business to sell its assets before appointing administrations.
It is a powerful way of selling on a business to a third part of buyer.
All 166 Debenhams stores will continue to trade, although 50 branches have already been ear-marked for closure.
It has not released a list of stores which will shut down.
We reveal more about the process in our guide to what has happened to Debenhams.
Customers are still able to spend their gift cards as stores will continue to trade as normal.
As part of the deal Debenhams bosses will also renegotiate rents with landlords to help tackle funding problems.
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The department store turned down Mr Ashley's second offer, which was made in the early hours of this morning, because it would make him chief executive.
It would have seen Debenham's lenders agree to write off £82million of its £720million debts, which the retailer said was "not sufficient".
Yesterday, the department store rejected a similar offer of £150million from the Sports Direct billionaire.
Shareholders such as Mr Ashley, who holds a 30 per cent stake, have seen their investments wiped out as part of the new plan.
In a statement issued to the market on Tuesday afternoon, Mr Ashley said the administration should be reversed and Sports Direct given access to information to "save the business for all stakeholders".
He also slammed the authorities and the retailer's advisers.
"These politicians and regulators have proven to be as effective as a chocolate teapot," he said.
"I restate my call for the advisers to go to prison given their skulduggery in undermining shareholders and other stakeholders, such as employees and pensioners."
This morning, Debenhams asked city watchdog the Financial Conduct Authority to temporarily suspend its shares.
Debenhams' chairman Terry Duddy said "Debenhams will continue trading as normal" and that it could continue with its turnaround plan.
He added: “In the meantime, our customers, colleagues, pension holders, suppliers and landlords can be reassured that Debenhams will now be able to move forward on a stable footing.
Retail mogul Mike Ashley gives evidence before the Housing, Communities and Local Government Committee on high streets and town centres
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"I would like to thank them all for their recent and continuing support."
Last year, the Sports Direct boss ploughed £90million into House of Fraser, pulling it out from the brink of collapse.
At the time of purchase, he vowed to save 80 per cent of the chain's department stores, but since then shoppers have accused the retailer of morphing into Sports Direct.
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